Payday Loans Really Make You Pay in the End!

When cash is short and there is still have wait of a few days before the next paycheck, there are numerous places where offer payday loan.  Oft times referred to as cash advance loans, fast cash or payday advance, a number of locations offer fast and easy ways to get the cash you need until your next payday.  There are numerous businesses (some even found on the internet) that offer to loan you small amounts of money from one to four weeks

Using payday loan companies is possibly an easy way to avoid having bounced checks, late payments and bad credit that is associated with both.  With most companies you do not have to qualify with a credit check, you just have to have proof of a job and income.

The downfall with getting a payday loan is that the interest rate is much higher, averaging 300% APS.  The majority of the lenders will say the reason is because the loan is only being taken for a short period of time.  So you end up paying more interest on your loan than you pay back on the money you borrowed in the first place.   One reason is because with repeated use this could possibly be the beginning of a cycle that can end up with always owing money to the payday loan companies.  Another is that a lot of time a person will have to delay paying the loan or borrow even more than what was originally borrowed, causing more debt than they had previously.

When getting a payday loan, you have to provide the advancing company with a copy of your last pay stub or some other proof of employment.  They also require a post-dated check for the amount that you are borrowing plus their fee.  The fee is not that high, however the interest rates are.

If you have taken a payday loan and you are caught this cycle, there are some ways you can get free of it.  Speaking to some one at the loan company and telling them that you are unable to pay the amount that is due and see if you can work out the terms.
It is of course an option to stop payments to them (not advisable).  This can help you to get out of debt in other areas that are more vital to keep a good credit record. 

There are other ways to borrow money for short time periods that will not cost you as much in interest, nor cause you to get in a bind later on.  You can try working with a credit union, because they will generally offer smaller loans using the same or guidelines as the payday loan companies.  The big difference here is that the APR is only around 15%, which makes it actually possible to pay the loan off.  If you already have an account at a credit union it may be possible to get a lower interest rate, as you would be borrowing from your own account.  A nice option with this is that upon repayment you would be earning dividends.

Another way that you can avoid using lenders such as this is to take a cash advance from your credit card.  The APR on your credit card ranges from 20 to 25%, (which is still better than 300%), and you can pay it back over time.  You need to be careful doing this though, as you don’t want to over extend your credit card, which can cause problems with your credit file.

You can also check with your bank and see if they offer overdraft protection available, which gives you an automatic loan when you write a check for a bill or purchase and you don’t have the money in your account.  Some overdrafts protections allow you to repay the money over time…be careful here though because some of them pay back with your next deposit.

Also speak with your creditors that you are having a problem paying.  They may have a grace period that you may not be aware of, or they may be able to offer you another option to help you with your payment.

Even though payday and fast cash lenders may seem like a quick fix to your money shortage problems, the impact is that it can become a larger problem for you during that short time.  Because the high interest rate may become a financial strain, then if you are unable to keep up the payments you could start receiving some very harassing calls not only at home, but also at work as well.